 As you all know, I'm sure we are on the verge of a halving, and this is the fourth halving. So before I go into the questions for this sequence, I'm going to talk a bit about the halving and my experience over the last, I guess it's almost 12 years now, that I've been involved with Bitcoin and monitoring and paying attention to this stuff. So the halving is a regularly scheduled event that happens on every 210,000 blocks of the Bitcoin blockchain. Every 210,000 blocks, something changes. And what changes is the block subsidy, which is part of the reward that miners earn by mining a block of Bitcoin, the block subsidy is reduced by half. So on Genesis, when Satoshi launched the network, every block included 50 new Bitcoin, 50 new newly minted Bitcoin as part of the reward. So every block mined, the miner who mined it would earn 50 Bitcoin. 210,000 blocks or about four years after that in 2012, the first halving occurred and the block reward was reduced to 25 Bitcoin. And that was my first halving. So I was around for the first one. Four years later in 2016, the block halving happened again at the 420,000th block and the reward went from 25 Bitcoin to 12 and a half Bitcoin. And then after that in 2020, it went down to six and a quarter. And then five days, 10 hours, 26 minutes-ish, it will go from six and a quarter to three and an eighth or 3.125 Bitcoin. All right, let's dispel some myths, look at some of the questions that arise around this time and talk about some of the most common concerns that people have around this special time. So first of all, we say for simplicity that the reward will be three and an eighth or 3.125 Bitcoin, but of course, on the system, in the software, in the blockchain, Bitcoin does not exist as a unit of measurements. What is measured instead is Satoshis. So in fact, the reward will be 312,500,000 Satoshis. That's the new block reward because every Bitcoin is 100 million Satoshis and Satoshis are the only thing that exists. So values in Bitcoin and the system are recorded in integer Satoshis. We use the Bitcoin metric or unit for convenience and of course that forces us to put a decimal point and several digits after the decimal points in order to get any kind of accuracy. And, but in the system, we only measure Satoshis. So this is interesting because this has some implications about what happens during the halving. What happens during the halving is not a division, not in the traditional sense. It's a binary division which happens by shifting the binary digits to the right. So if you take a binary number and you shift it right, what happens is it divides it by two. So for example, the binary number, the decimal number two in binary is one zero. If you shift that right, it becomes zero one. And that's how you divide two by two and get one as the result. I don't know if that made any sense, but that's how it works. So shifting right in binary is how we do the division, which also answers an interesting question we get. Queen Dublopoulos asks, by 2048, it looks like the reward may get down to fractions of a Satoshi. Does it just round up or round down to the full of Satoshi? So fractions of a Satoshi, fractions of a Satoshi do not exist. Satoshi is always recorded as an integer. The only place where we do have less than a Satoshi, we go down to Millie Satoshi as the lightning network. And in that case, in fact, it is rounded up when it hits the blockchain to integer Satoshi. So what happens when you take the binary number one, which is the smallest integer one Satoshi reward at some point, and it's actually gonna be in the year 2142 approximately, what happens when you shift that right by one position, it becomes zero, that's all that happens now. In binary arithmetic, actually it doesn't become zero. And here's an interesting bit of historic trivia from the Bitcoin system, because Satoshi wrote this equation to simply shift right. What happens is after 64 halfings, the number shifts right and it goes from one Satoshi. And then in binary, if you shift right and there's only one digit, what it does is it wraps around to the maximum number you can encode as a binary number. So the one ends up going to the other side, to the left. Which, if you have perhaps already figured it out, means that based on the original implementation of the formula that exists in the Bitcoin network, in the last halving, the reward would go from one Satoshi to I believe it would have been six billion Satoshi, 6.4 billion Satoshi as the reward of the very next block, which is not desirable, not desirable. Some might even call that a bug. So that in fact, someone noticed this and a patch was made to Bitcoin Core and has been replicated in every other client that has implemented this formula to make sure that that doesn't happen. So the last halving will take us from one Satoshi to zero Satoshi reward. That's it, it's as simple as that, right? So we only counted integers, there will not be fractions of Satoshi recorded. Now, another strange thing happens during the halving and that is a flurry of speculation, especially among media that is not Bitcoin savvy about what the impact of the halving will be on the price, on the health of the network, et cetera, et cetera. And we see this frenzy of media speculation repeat every four years and every four years is the exact same story. The first and most common story we hear is known as the death spiral. So basically the story goes like this. When the halving happens and the reward per block is reduced by half, miners will find that they are suddenly unprofitable based on the current price of Bitcoin and the amount of energy they use to mine and the current difficulty, all of those parameters that go into whether they're profitable or not. When they discover they're unprofitable, they're gonna go, oh well, that was fun. I guess 14 years is enough and then they will turn off their miners and stop mining and all of them will do this simultaneously and the result will be that there won't be another block because the difficulty will be too high, there won't be enough miners, the hash rate will drop, it will take too long to mine the next block which will reduce the profitability for more miners who will then turn off which will reduce the profitability for more miners who will turn off because we're never getting to a difficulty adjustment. I have to mine 2016 blocks to get to a difficulty adjustment and if miners are dropping like flies, we never even get to the next block let alone 2016 blocks to actually get the difficulty to retarget. And so as a result, the network grinds to a halt and this is described as Bitcoin's death spiral has been predicted every four years before the halving, people write articles all about this. It's a very exciting story, right? It's a very clickbaity story. Here's why Bitcoin will crash on April 19th. Now, I love stories like this. In fact, we had a similar type of a scenario recently on April 8th during the annual eclipse that was happening over the continental United States. And that story came with another predictable media story and frenzy of speculation that is probably as old as eclipses which was that the world would end because of a shadow of the moon. And so the world would end on April 8th. I know in the US, a lot of people were preparing for the rapture. My favorite story was one lady who spent the previous few weeks going to her favorite diner and tipping hundreds and hundreds of dollars on every meal she wanted to get, give out all of her money before the rapture to kind of swear her accounts with God and that of course the rapture didn't happen. And then predictably on April 9th, she went back and asked for a refund claiming that it was fraudulence. So the rapture didn't happen and neither will Bitcoin's death spiral. The world did not end. But despite the fact that this is a story that simply based on looking at the previous four occasions, you could dismiss as fanciful, we are hearing it again. So a lot of people are worried about the death spiral of Bitcoin. Now, the reason why this story doesn't make sense is because miners are not a monolithic block. They are experiencing a very broad variety of circumstances which will inform their decisions on profitability. So if all miners were running the same equipment with the same efficiency, buying electricity from the same electricity provider at the same price and the Bitcoin price didn't change while the rewards dropped by half, yes, all miners would become unprofitable at the same time. And if they somehow failed to notice that this was coming. But in fact, miners have a broad variety of equipment even within a single mining farm. Between miners, there'll be different equipment with different efficiency. They buy electricity from vastly different, electricity providers at vastly different prices. And so while some miners may become, while some miners may find that some of their equipment in some of their locations has become unprofitable and turn that equipment off, not all equipment at all locations and not all miners will become unprofitable at the same time. And so as long as there are enough miners to mine the next block, and if you do the math, it's really simple. If half the miners disappeared, all that means is that the next block will come out in 20 minutes instead of 10. Even if half the miners turned off their equipment and the hash rate dropped by half, we would then have 20 minute blocks. And we would have 20 minute blocks for 2000 blocks which would mean four weeks. And then after four weeks, there'd be a difficulty retargeting. The difficulty would drop by half and all of the miners who hung in there and kept their systems would suddenly become very profitable. There's another story that comes out around having and that is a pure microeconomics story. And that pure microeconomics story looks at Bitcoin itself as a commodity that is priced based on a supply demand curve as if it's a consumable commodity. And that story says, well, if demand remains the same and supply is reduced by half, the price equilibrium will have to rebalance at double the price, right? So if you have a fixed demand for a product and supplies reduced by half, then the price of that product should double in order for supply and demands to match again. That story is the overly optimistic rather than the doomsday scenario. And that story comes from a lot of people who are looking at this as an opportunity to profit. So the having represents a giant boost in the price. That story isn't so easy to dismiss and it's not so easy to dismiss because in the last three haveings, that more or less did happen. Now it doesn't happen instantly and it doesn't happen predictably and it doesn't happen linearly. Instead what happens is there's a delayed response while the market catches up to the news. And sometimes that delayed response is as big as six months. The supply crunch certainly puts a lot of pressure but in many cases all that does is suppress demand. And people are waiting, they will wait to see what's gonna happen with the price. And then gradually it goes up and usually it overshoots. So instead of doubling it usually goes a bit higher than that. Now that's what happened in the past. Will that happen this time? Obviously I don't know. And anybody who tells you that they know is lying. But interestingly enough, things are a bit different this having. First of all, in many of the previous haveings, just before the having, the Bitcoin price was relatively low by historical levels. This having, we're going into the having, we are proceeding the having by an all-time high Bitcoin price. So rather than trailing it by six months, this has kind of been priced in in advance by about six months. And that's probably because of the ETFs and nothing to do with the having. The second thing that's different is we're going in at an all-time high hash rate, again, proceeding the event. And we're going in with institutional investors. So all of those things are new and who knows what happens next. We'll find out. So that's the story of the having which happens in five days. Now, if you go online and you look for live countdown or Bitcoin having clock or Bitcoin having live countdown clock or some combination of these, you're going to find five or six different websites and those websites are going to tell you the estimated time remaining. Two weeks ago, those clocks were had vastly different estimates. And the reason they had vastly different estimates is because they didn't know what difficulty and hash rate would be during this epoch. There's since been a retargeting of difficulty which happens every two weeks on average. And so now we know what the difficulty going into this is and assuming that the hash rate remains stable, you're now going to see the estimates when this is going to happen and going to converge. And now the difference you're going to see in the estimates depends on how they calculate the 783 blocks that remain until having. So what's the obvious way you can count this? You can say, well, 783 blocks times 10 minutes each. That's 7830 minutes until having, right? Easy peasy, straightforward and probably wrong. Part of the reason it's wrong is because Bitcoin has another bug that isn't often discussed which is the having interval is actually calculated across 2016 blocks. Sorry, it's calculated every 2016 blocks but it's calculated on the timestamp and basis of the past 2015 blocks. And that's another classic error that exists in programming that's called an off by one error. It's when you forget to count zero as one of the numbers in the sequence and you think you're starting at one which in programming is never the case. So as a result of that, the difficulty adjusts to be slightly faster every retargeting period. And so if we look at the last retargeting period we might assume that instead of 10 blocks it's actually closer to, instead of 10 minutes, it's actually closer to nine minutes, 50 something seconds in terms of the actual difficulty. So that's some historical information about where we are, why we're here and what happens next. And now we wait and in five days, I have a prediction to make. What is going to happen in five days? And the answer is really nothing. None of these scenarios are going to play out because usually at the moment of the having nothing really changes except for the blocks upside. Nobody starts turning off mining machines. The nobody dives into the markets and starts buying at that specific block to catch the wave. In fact, every time we've seen it everybody just holds their breath for a day or two to see how things are going to play out. And so my prediction, five days, 10 hours from now nothing's going to happen other than block 840,001 is going to come out. And if you look in the Coinbase of that block you will see that the reward is 3.125 Bitcoin. Hi, thanks for watching the video. I'm Andreas Antonopoulos. I'm the author of Mastering Bitcoin, Mastering Ethereum, and the Internet of Money series. If you'd like to support my mission of bringing education about Bitcoin and open blockchains to as many people as possible under open free Creative Commons licenses please consider subscribing to my channel and supporting me on patreon.com slash a-a-n-t-o-n-o-p. Thank you.